Banking, Money and Taxes in China
Opening a bank account in China is easy and recommended as withdrawing money from an overseas account via ATMs incurs expensive fees. To open a bank account expats need their visa, proof of residence, passport and patience to stand in long queues for a fairly straightforward application process. Often it is possible to connect with an overseas bank account allowing for money transfers between two accounts.
Information provided by banks is often written in Chinese and it is a good idea to either ask for an English translation or bring along a Chinese reader. While Chinese banks will provide new account holders with a debit card which works at the many ATMs in any major city, paying for goods at stores is usually done with only cash. The withdrawal limits are lower than in Europe or the US, but for the big spenders, opening two accounts doubles the withdrawal amount.
Taxes
China taxes expats on their total world-wide income only when they have lived in the country for at least five years although if the individual also pays taxes abroad, these can be deducted from the Chinese tax. Expats living in China between one and five years must pay taxes on income derived from China and on income brought into the country. Expats living in the country for less than one year only have to pay taxes on income derived from China. For many expats, who live in both China and a separate country, the total days spent inside China are used to determine tax status.
Incomes over RMB4,800 are taxed at a progressive rate which can reach 45 percent of income for top tax brackets. Tax laws change often and it is important to keep up to date as the country has been increasingly concerned with tracking expat taxes. As in any country the tax laws are complex and may be better dealt with through a tax planner. Companies should help newly hired employees initially register for the tax system.
TaxesChina taxes expats on their total world-wide income only when they have lived in the country for at least five years although if the individual also pays taxes abroad, these can be deducted from the Chinese tax. Expats living in China between one and five years must pay taxes on income derived from China and on income brought into the country. Expats living in the country for less than one year only have to pay taxes on income derived from China. For many expats, who live in both China and a separate country, the total days spent inside China are used to determine tax status.
Incomes over RMB4,800 are taxed at a progressive rate which can reach 45 percent of income for top tax brackets. Tax laws change often and it is important to keep up to date as the country has been increasingly concerned with tracking expat taxes. As in any country the tax laws are complex and may be better dealt with through a tax planner. Companies should help newly hired employees initially register for the tax system.
